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FHA 203k Streamline Rehab Loan

What is a 203K Loan?

The FHA 203K Rehab loan is a cost-effective loan which allows a buyer to finance necessary repairs and or desired home improvements while utilizing a 3.5% down payment FHA loan. It allows a single loan to facilitate a purchase or refinance along with renovating the home in a single transaction. Ultimately, this saves time and money because there is only one set of closing costs, one loan approval and closing. It’s the perfect program for a property that needs a little work and the buyer doesn’t have the cash to pay for improvements.

There are two types of 203K Rehab loans; Standard and Streamline. A Standard 203K Rehab Loan program can include structural changes, additions, fencing and improvements over $35K. However, the Streamline program is more popular in our market today. See below for highlights.

Program Eligibility

  • 30 year fixed rate FHA mortgage n Primary residence only
  • No minimum rehab amount, max is $35,000
  • FHA guidelines apply for loan credit approval
  • Minimum 640 credit score
  • Cash reserves may be required
  • Interested party contributions allowed up to 6%
  • Standard FHA investment required
  • Max 96.5% Loan to Value on a purchase
  • Max 97.5% Loan to Value on a refinance
  • Attached and detached single family residences, condos, and PUDs
  • 2 to 4 unit Properties, where the owner lives in one of the units
  • Energy Efficient Program Allowable

Remember to notate on line 305 of the contract: “Buyer obtaining a FHA 203K rehab loan; terms & conditions apply.”

Types of Improvements Include

  • Repair/Replacement of roofs, gutters and downspouts
  • Repair/Replacement/Upgrade of existing HVAC systems, plumbing and electrical systems 
  • Repair/Replacement of flooring
  • Minor remodeling, such as kitchens, which does not involve structural repairs
  • Painting, both exterior and interior n Weatherization, including storm windows and doors, insulation, weather stripping, etc.
  • Purchase and installation of appliances
  • Accessibility improvements for persons with disabilities
  • Lead-based paint stabilization or abatement of leadbased paint hazards
  • Repair/Replace/Add exterior decks, patios & porches
  • Basement finishing and remodeling, which does not involve structural repairs
  • Basement waterproofing
  • Window/door replacement and exterior wall re-siding
  • Septic system and/or well repair or replacement

Note: Structural alterations and luxury items such as swimming pools and barbecue pits are not eligible.

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